Is P2P Ready for Sponsored Downloads?

Is P2P Ready for Sponsored Downloads?

JULY 12, 2007

Is music valuable if consumers never pay for it?

three-quarters of US Internet users are willing to view ads in exchange
for free or discounted downloads, according to the INTENT MediaWorks-sponsored "P2P Usage Survey" conducted in May 2007. The study was fielded by InfoSurv among Internet users ages 16 to 40, all of whom used multiple online services for searching, downloading and sharing music.

More than six in 10 respondents were willing to provide personal information in order to receive free downloads.

Only 21% of survey respondents said they had used a P2P network to get free downloads.


Andy Cooper of INTENT said, "More than 80 million US Internet users
search and download files from P2P networks each month, 10 million or
more at any one time."

"When consumers find the files they are looking for, they share
files with friends through P2P, personal blog posts, adding the files
to their social networking pages, or send them via e-mail, text or IM,"
Mr. Cooper added. "If advertisers sponsor that content, their programs
can reach consumers across multiple Internet channels from one source."

The suggestion that music can be free, even if supported by
ads, tends to draw controversy. Prince recently drew fire by giving
away copies of his latest CD in copies of the UK Mail on Sunday — never mind that The Mail paid him do to so.

Companies like SpiralFrog and QTrax
are also appealing to consumers with the word "free." The firms have
been acquiring licenses from major and independent label groups to
create music destinations that are free to consumers and entirely
supported by advertising revenues.

Allen Klepfisz of QTrax argued that an ad-supported model
reflects current consumer behavior. "If you have a whole generation
that believes it’s their birthright to have free music, you need to
monetize it," he said. "There are now about three billion transactions
a month in P2P, mostly illegal. The closest your business model is to
current consumer behavior, the better its chance of success."

An increase in legal music downloading options has been reversing the trend in illegal downloads since 2003. In January 2006, a Yankee Group
survey noted a substantial increase in the amount of legal online music
downloading activity from 2003 to 2005, along with an even bigger drop
in the use of illegal P2P networks for downloading music.


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